When is solar electric affordable? How long does it take to pay for itself? Should I buy a system, lease a system, or let a solar vendor like SolarCity become my utility company. Do I buy in now or do I wait till it gets cheaper? And should I take the environment into account?

These are the complex questions one has to ask when buying solar. So I’ll try to deal with them in a logical order taking into account different kinds of buyers with different economics and different values. I’ll try to do the easy ones first and work my way up to interesting and tricky ways to look at the issue.

First – if the environment is your concern the sooner the better. Every KWH you make is a KWH not generated by coal, nuclear, or natural gas. Different states get their power from different places so your state could be clean or dirty. So if you want to stopp adding carbon to the environment then that adds justification to go for it.

But – let’s just say that the environment isn’t a big factor and you just want to look at the numbers? Should you jump in now or wait till next year when it’s better and cheaper than it is now? Why buy a system now that pays for itself in 10 years if you can get one next year that pays for itself in 8 years? let’s look at different ways of viewing the cost problem.

let’s use round numbers just to keep things simple. Your electric bill is $100/month. A solar installer Will sell you a solar system for $12,000 installed. So assuming it makes 100% of your power and ignoring a meter bill in 10 years the system has paid for itself and for the next 10 years after that you have free power. Kind of like the way it feels to pay off your mortgage.

This very simple model isn’t quite accurate because it doesn’t take into account that power rates are going up. As the cost of carbon based energy rises electric rates will increase. So if rates go up 7% a year then after 10 years your bill would have been $200/month rather than $100. That makes the break even point sooner, say 8 years. And after 20 years the rate would be $400/month and you’re paying nothing.

But is that the best way to look at it? Do you really want to put the money up front and wait 8 years to justify it – or you don’t have the money and need to borrow it. If you borrow the money then you aren’t putting your money down and the cost of your power is your loan payment. On a 20 year note at 5% interest your payment is $80 which is $20 less than your current electric bill and stays flat for 20 years while power rates increase from $100 now to $400 20 years from now. So in that sense you are money ahead immediately.

Another method is the idea that companies like SolarCity become your utility company. You are never buying and you will never own the solar panels. SolarCity or your other solar vendor owns the equipment and they become your “electric company”. You still have to pay meter rent but most of your electricity will be billed to you by SolarCity, and at a lower rate than the utility companies. but unlike the flat rate that you would have if you bought the panels with a loan, SolarCity can increase your rates no more than 3% a year. But that’s a lower rate of increase that the utility companies have increased their rates historically.

So why would this be better that just getting a loan? Because SolarCity is so large and buys in volume and have their installation perfected, they can put solar on your roof cheaper than you can from a local contractor. And because they retain ownership in the equipment they can take tax deductions for depreciation that home owners can’t take. So the initial electric rate they charge you might start out significantly lower than your loan payment, making it somewhat more even.

Additionally SolarCity, because they are the biggest, is more likely to do it right. That takes away some of the risk of someone not doing it right and you’re paying for something that doesn’t work. And since SolarCity is providing power and owns the equipment they also maintain it. So you have no maintenance costs. So it might cost more – but it’s more worry free.

Finally – and this is the most imaginative solution – I think there’s a way to get it all for free. but there’s some risk involved and it relies on assumptions that may or may not happen. But this is what I’m doing.

I’m starting to save and invest for retirement and buying some stocks in places where I think I’m getting in on the ground floor of an emerging market. So here’s what I’m doing. i’m taking the money I would have spent on the solar system doing it myself and buying SolarCity stock with it. The idea being that SCTY stock is going to increase in value enough to pay my electric bill. $12,000 today will buy 200 shares of SCTY at $60/share. If the stock goes up $6 in this first year then it pays my power bill now, and my electricity is basically free. But – who knows if that will be a good investment. So far I’m down about $1000. But that’s to be expected short term.

SolarCity also has a referral program where they will pay you $250 for a referral so if you refer 4 people a year, in my case, I make enough to pay for my power. So even if I don’t get rich on SCTY stock I might make it up in referrals. So there’s 2 ways to get your electricity totally free.

So – do you jump in now or wait and see? It’s just like buying a computer or cell phone. If you wait it’s just going to get better. But the longer you wait the more savings you’re missing out on. A few years ago the numbers were a lot harder to justify than today. And it depends on where you live. Here in California where electric rates are high and the state is solar friendly, it makes sense here. In your state it might not make sense yet. If you hold off it’s just going to get better.

The bottom line is carbon based fuels are going away and solar is going to replace it. So the only choice is if you are going to get in early or later. I’m a geek and solar is kool and I get a new toy to play with so I’m in. Hope this information is useful in helping you see solar for a new perspective.



  1. David M says:

    Of the top 10 U.S. power plants ID’d by CO2 emissions “avoided” in 2013, 9 are nuclear.

    https://twitter.com/NEI_media/status/514057919219105792/photo/1

    • jpfitz says:

      Where does the energy producing spent fuel go. Not in my backyard.

      • David M says:

        Spent nuclear fuel is not a problem.

        http://atomicinsights.com/waste/

        http://www.world-nuclear.org/info/Nuclear-Fuel-Cycle/Fuel-Recycling/Processing-of-Used-Nuclear-Fuel/

        Yet, we will accept many new and larger fossil fuel power plants over our lifetime, which have been killing thousands yearly, and will continue to kill thousands, from their toxic waste. Not to mention their possible impact on the climate.

        I cannot name anyone who died as a direct result of radiation or toxins from nuclear power plant or spent fuel rods. I have several relatives who have died, or will die in my lifetime, as a direct result of fossil fuel waste toxins. None worked in the fossil fuel industry.

        If you ever meet a nuclear industry professional, ask them if they would prefer their family live next to a nuclear power plant, with spent fuel stored, or next to a fossil fuel power plant, or perhaps next to a factory creating solar cells or next to several square miles of wind or solar power generators. Hint, nuclear professionals are not ignorant people.

        • bobbo, we think with words and often fail at math says:

          Yep. Everything is just fine….. until it isn’t.

          Good long term planning there Harry!

        • KenH says:

          Not to be a buzzkill, David, but personally speaking, I’d rather live IN a fossil fuel plant, a factory creating solar cells or a wind or solar farm than be within 50 Km of the Chernobyl or Fukushima nuclear plants right about now.
          I can’t name anyone that died from DIRECT exposure to radiation and toxins from those two plants or their “spent” fuel rods either, but that doesn’t mean that deaths did not occur…
          Perhaps a read of “The Black Swan: The Impact of the Highly Improbable” by Nassim Nicholas Taleb might be informative as to the disproportionate effect of small errors in cases such as these.
          I’m not advocating cranking out more fossil fuel plants and their attendant emissions, but current nuclear technology is not the best alternative in my view.

  2. bobbo, we think with words and often fail at math says:

    My gut feel from the loose reference to numbers you provided really makes me wonder BASED ON THE MONEY GENERATED why you are paying for electricity at all, other than the back up.

    If Solar has pay back in 10 years and a reasonable life of 30 seems to me Solar City is making a TON of money and YOU are a chump.

    All to the point: since Solar City isn’t doing it, seems to me the numbers are here NOW for the Gubment to outright install, mandate the install, of solar everywhere.

    As you first noted–it already saves the environment==and even if it had a 30 year pay back===>thats exactly what the gubment is there for.

    RELATED: I keep getting pop up adds for Zero Cost Solar install program but when I click on them I get a variety of bait and switch advertising garbage and I haven’t waded through any of them.

    Do you have a firm notion of why you didn’t buy your own system and really save money after 8 years? Seems like the no brainer position to me.

  3. Cloudy Skies says:

    Some questions:

    How long do solar panels last (either because they break, or their efficiency drops unacceptably low)?

    Do you install these over a shingled roof? If so, and the roof leaks, what do you do?

    Are their other support components of the system that wear out? If so, what are the expected repair costs and frequency of repair?

    Are you encouraged to purchase a SolarCity maintenance contract? If so, how much does (will) it cost?

    Are you being compensated by SolarCity for your endorsements?

    • Marc Perkel says:

      It’s officially good for 20 years. Quite frankly after 20 years I’m going to want the latest and greatest that is going to be better.

    • Marc Perkel says:

      Yes -I’m an Elon Musk worshiper and I’m buying SolarCity stock and I get $250 for referrals, and I bought one myself.

    • jpfitz says:

      I’ve read if roof problems occur it’ll cost about $1500 to pull down and put up panels.

  4. jpfitz says:

    Marc, question, if the power grid goes down due to fire or other natural disaster will your panels power your home? From what I read the grid has to be up for the panels to operate. That was what happened up here after super storm sandy, solar panels on roof tops but not useable. I read that smart inverters are needed to power a micro grid. The guys working on fixing the grid don’t want juice flowing to them for obvious reasons.

    • bobbo, we think with words and often fail at math says:

      jp==excellent comment. Like most consumers…I just assumed solar put you off the grid and independent. Things are always different when you really get into a subject.

      I’d think—it would be pretty easy to have a manual switch that you could operate to separate from the grid and power yourself? Rather silly not to?

      None of these issues are “complicated.” They just have to be identified and worked through.

      Personally, I don’t really know why, I’d retro fit a manual “off grid switch.” Shouldn’t be expensive at all for the switch…. but yeah, the design of the system could be to prevent that.

      • jpfitz says:

        Hey, there you are bobbo! Where have you been? All’s well?

        I don’t think it’s as easy as we would think to pull the switch, or have a smart switch that would automatically pull you off the grid. I am really just learning about how all this green energy will work in an emergency.

        I’ve look into natural gas powered large scale full home capacity generators that automatically start up within minutes of a power outage. Up here in hurricane area power outages are in season about now. I’ve gotten used to them and have an assortment of always ready lamps, including extra rechargeable batteries. A large cooler to keep the milk cold. We have a natural gas furnace so a generator would power the furnace for heat if necessary, and also a fireplace if gas is scarce as it was when Sandy hit.

        • bobbo, we think with words and often fail at math says:

          Everything is fine. Hard to be “present’ when there is a new OP only every other day and 2-3 in a row are about tech I don’t own.

          I suppose I could interject myself irrelevantly and post:

          “yawn.”

          But, that wouldn’t be ‘ME’=== and “♫…I gotta be ME!”

          This place is dying though. Sad.

      • jpfitz says:

        Thank you for the kudos, Mama taught me to give thanks when given a compliment.

        Here is an article about solar power on a grid.

        http://npr.org/2014/09/17/348987688/when-the-powers-out-solar-panels-may-not-keep-the-lights-on

    • Marc Perkel says:

      Yes – that’s true. If the grid goes down I’m without power. I might eventually upgrade to an off-grid system.

      • jpfitz says:

        Micro grids will be the new way to deal with that power loss. Obama has funded for fifty thousand “folks” to be trained in solar power systems and installations.

      • McCullough says:

        I’m installing a off grid hybrid system that while still able to draw off the grid if necessary, does not back feed power to the grid. Net Metering has been suspended on the island so the gov’t is not allowing any more solar homes on the grid, but if that changes, I’ll be able to sell power back some day.

        That solves the problem, but the batteries are not cheap.

        • jpfitz says:

          That’s my next item of interest, the batteries, cost and life expectancy. I have much to learn. Do the batteries give off a noxious fumes, and are there dangers of overheating the batteries causing fire?

          So much to learn before I commit to the storing the suns energy. I am really excited about having power from the sun to negate the power company, if I told you my electric bill you’d stain your pants. We own a high ranch without two zone heating. During the winter months downstairs where my Father in-law lives who is always cold we make comfortable with two electric heaters.

          • McCullough says:

            These are the batteries I’ll be using, supposedly safe (from noxious fumes) but they will be in an area where fumes should not be a problem anyway. 10 year average life expectancy.
            Cost is very high but you have to go with a high end deep cycle battery.

            There will be monitoring of the batteries to keep them in good condition. The idea is to keep them at a certain level, (not letting them drain at night or during inclement weather, but just skimming off the top). So I may add a small gen to keep them topped off, or I can program the inverter to draw from the grid when the batteries reach a certain level. I will still incur a small charge for grid power in that case.
            I like the idea of the hybrid system for the simple reason that power here SUCKS and when the grid is down, I wont be. Unlike the people who are using a grid tie system

            http://tinyurl.com/m3wq72u

          • Tim says:

            These sound nice. Also, nothing says “you’ve got storage” like a giant battery that bubbles…

            http://cleantechnica.com/2014/04/29/floodgates-open-vanadium-flow-batteries/

    • Marc Perkel says:

      The inverters shut down if the grid goes off so there is no safety problem for power line workers.

  5. jpfitz says:

    In general people in the states are really dragging their feet and moaning and groaning about all the renewable energies. If it’s not about the birds then it’s about the guberment giving either homeowners or solar companies monetary incentives to get off of non renewable energy.

    Once all these old farts die and the younger generations embrace the new tech, the middle east and the Levant problem can be forgotten. I include myself as an old fart but I was selling wood burning stoves during the energy crisis back in the late 70’s and couldn’t wait for a way to harness the suns energy.

  6. mainecat says:

    I do not think you can win weather you buy or lease. I reinsulated and changed my heating system, significantly dropping the amount of energy I used. National Greed then increased my delivery charge to compensate so my total bill remained constant. All savings went to the utility, not me.

    • bobbo, we think with words and often fail at math says:

      wouldn’t your expense have gone up if you hadn’t changed your system? Ie==you are saving money. You stayed level in a market that is going up.

  7. MikeN says:

    Where is the evidence for utility rate increases, and how much of that is because of the renewable energy mandates? I haven’t noticed much in the way of increases, though perhaps this is because they keep reporting in c/kWh which is too small a number.

  8. MikeN says:

    Have you ever done any analysis of various energy efficiency improvements, like better windows or insulation?

    • Marc Perkel says:

      Yes – I have new windows – insulation – and LED lighting. I even invented my own air conditioning system. I was almost rejected by SolarCity because my usage was too low.

      • MikeN says:

        I wonder if the cost savings for these are even higher. I know people whose insulation is so poor that they were paying hundreds a month in wintertime for a 1BR apartment.

  9. Peppeddu says:

    There are also another options you didn’t mention.

    You can finance the equipment and in the financing you include also an insurance that covers any equipment failure for the life of the loan. In this way you get both the benefit of owning and the benefit of leasing.

    Another option is to get off the national grid.
    In Schönau, Germany, the residents bought (and they now own) the local electric grid. They all produce electricity that they sell to each other at a much lower rate than the big companies, and the excess electricity is sold outside of town for profit.
    And it’s not just solar, some produce hydroelectric, farmers use biomasses, some use windmills etc.
    Really cool concept.
    http://www.sbs.com.au/dateline/story/watch/id/601443/n/Power-Play

  10. John says:

    I’ve already made more on Tesla stock than you could ever hope to make on Solar City stock, Mark…

  11. bobbo, I sure hope the future turns out different says:

    Marc–is your electrical USE all ac or are there circuits that provide dc power as well? Makes sense to have dedicated dc circuits with lighting going to led which are dc. Lots of other electrical appliances could to that way too.

    Ha–ha. All the different dc voltages==still need a converter or step down unit?

    Its an ac device that you can connect to high power and it will only draw what it needs…… while a dc device will BE powered by whatever is coming at it with meltdowns and explosions if a 5 volt unit is plugged into a 25 volt circuit?

    Something like that. I could see the whole house being ac with individual dc converters like today for the small appliances with dc circuit for dedicated lighting. Thats what I would “like,”

    • bobbo, I sure hope the future turns out different says:

      —-and a dc circuit to recharge your car of course.

      Are you doing that as well? I’d think that would be some real cost savings there.

      I like the “tech” of excess power being used to compress air as a back up power source. That can power cars too–quite efficiently, but its not sexy.

      Another “battery” I like is creating hydrogen gas to be reconverted through a fuel cell when needed or burned directly. More dangerous. More sexy.

      • Tim says:

        ewww!

        The McIntosh, Alabama CAES plant requires 2.5 MJ of electricity and 1.2 MJ lower heating value (LHV) of gas for each megajoule of energy output, corresponding to an energy recovery efficiency of about 27%

        Some are better, more direct; I *guess* —

        http://en.wikipedia.org/wiki/Compressed_air_energy_storage#Existing_hybrid_systems

        • bobbo, I sure hope the future turns out different says:

          Yep–seems inefficient and wasteful==put the initial energy source is free..so the final product is free too.

          Its all about life time cost of the storage medium. That cost of course sums up the efficiencies.

          …..but if your car ran on a fuel cell…..
          ….and you had free hydrogen…..

          • Tim says:

            I’ve always liked the idea of some kind of insulated tank, either above or below ground, or both, where an appropriate type/scale Stirling engine would make an obnoxious kerr plunk kshhhh sound all night long supply the recovered waste heat thus power.

            If working with a relatively low temperature difference with the correspondingly low differential pressures then all that is required is larger working parts for the (Pressure) X (change in Volume) to deliver the same work as any high pressure or molten salt system — I *think*.

            This seems more scale-downable to individual communities and perhaps even single acre lots. I’d imagine something like those Polysteel (nasty styrofoam blocks filled with concrete, not the nasty ones that are like legos filled with concrete) buildings retrofitted for holding sharks boiling nurses birthing babies alongside dolphins, the natural way. As God intented it to be storing a working temperature difference in a large amount of liquid.

            If one doesn’t mind danger, then something like that benzene based stuff in Gooney birds could serve as the working fluid that could be brought to a boil at relatively low temperature differences depending on the chosen most practical working pressure. To drive the conventional turbine. Made out of many salvaged turbochargers off old Buick Regals all ganged together in series. With stickers reminding people that it causes cancer in California…

            Or just change the zoning laws and use a giant Gooney bird.

      • Marc Perkel says:

        I wonder if that can be combined with desalinization to create some drinking water out of ocean water as a side effect. When the hydrogen is burned to recover the energy it creates pure water.

  12. me says:

    Syria is being bombed but no discussion is here, in the most somnambulant blog in the universe.

  13. Kyusoath says:

    The brass balls on this guy.

    Whatever happened to JCD ? Why has Marc Perkel been allowed to take over this site ? Why is every post inane personal shit ? Is he being paid by solarcity to advertise ?

  14. dade0 says:

    Warning! Native advertising.

  15. Marc Perkel says:

    Marc Perkel is a total waste of carbon. This and the person whose behind is a fking idiot…..He even looks like a fuctard, therefore he is……That’s the reality of it all.

    • Mary Ainsworth says:

      ohhhh! Puppy love. That is adorable. You were able to overcome your mommy attachment issues and that is a good thing.


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